University of Technology, Sydney

Staff directory | Webmail | Maps | Newsroom | What's on

22319 Financial Statement Analysis (Capstone)

Warning: The information on this page is indicative. The subject outline for a particular session, location and mode of offering is the authoritative source of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.

Subject handbook information prior to 2018 is available in the Archives.

UTS: Business: Accounting
Credit points: 6 cp

Subject level:

Undergraduate

Result type: Grade and marks

Requisite(s): 22420 Accounting Standards and Regulations AND 25300 Fundamentals of Business Finance
These requisites may not apply to students in certain courses.
There are course requisites for this subject. See access conditions.

Description

The aim of this course is to demonstrate and apply a framework for business analysis and valuation using financial statement data. The emphasis of the course is on translating the tools of business analysis and valuation into practical situations. To achieve this, the course is relatively case intensive, with this method used to develop key skills as well as demonstrating their application. The course is intended for students interested in business consulting, investment banking, business analysis and corporate lending. Given the increasing trend towards a business analysis-based approach to auditing and assurance services, it is also relevant to those interested in public accounting.

Subject learning objectives (SLOs)

Upon successful completion of this subject students should be able to:
1. apply the basic techniques of financial analysis and business valuation
2. explain the linkage between industry analysis, strategic business analysis, accounting analysis, financial analysis and prospective analysis
3. demonstrate an understanding of how to use various different valuation models
4. explain the benefits and limitations of various different valuation models

Course intended learning outcomes (CILOs)

This subject also contributes specifically to the following program learning objectives:

  • Critically analyse relevant concepts to understand practice in business and related professions in a global workplace (1.1)
  • Demonstrate inter-relationships between differing business and related disciplines (1.2)
  • Locate and critically evaluate relevant data and literature to address business problems through a research approach (2.1)
  • Apply critical and creative thinking to address issues in business (2.2)

Contribution to the development of graduate attributes

This course focuses on establishing a clear linkage between several skills normally acquired by business students so as to enable them to conduct rigorous business analysis and prepare sound business valuations. The course combines skills in business strategy, finance and accounting, so as to enable students to apply these methods of analysis in combination. It also contributes to the accounting major by demonstrating the analysis of accounting quality and its implications for financial analysis and valuation.

This subject contributes to the development of the following graduate attributes:

  • Business knowledge and concepts
  • Critical thinking, creativity and analytical skills

Teaching and learning strategies

The subject will be taught using a combination of large lectures and smaller tutorials. The lectures provide the structure of the topic area, discussion of the theory and some practical examples. Tutorials provide an opportunity to discuss ideas, issues and make practical application of the theory, as well as encouraging students to think in a creative manner to solve real world problems, using learning from other core subjects. Extensive use is made of the UTS web-based communication tool UTSOnline, which will be used to share information, provide feedback and encourage interaction between staff and students. Students will also use appropriate computer software to complete assigned tasks.

Strategy 1. Students’ Preparation for Learning: Each week, students are expected to undertake pre-work which starts with readings on business valuation and financial analysis. These readings introduce students to the theoretical aspects of the subject and enable them to attend the valuation problems and real life case studies. After doing this pre-work, students are expected to work on their group and individual assignments and apply business valuation and financial analysis skills in order to understand and value an ASX listed firm.

Strategy 2. Lectures: Lecturers provide students both theories and practical applications about performing financial statement analysis in the real world. Students are expected and encouraged to discuss issues and challenge ideas about financial statement analysis during lectures.

Strategy 3. Active learning in tutorials: Each week, students are expected to debate over the pre-work that they have done prior to coming to the seminar. In addition, students are expected to work closely with their fellow students and their lecturer on analyzing and understanding the ASX listed firm that they have chosen for the assignments.

Strategy 4. Online learning: Extensive use is made of the UTS web-based communication tool UTSOnline, which will be used to share information, provide feedback and encourage interaction between staff and students. Students are expected to explore prescribed casestudies, videos, readings andengage in weeklyactivities provided on UTS Online. In addition, students are encouragedtoshare their questions and ideas on discussionboard, with prompt guidance andfeedback from the Subject Coordinator.

Strategy 5. Ongoing feedback: Structured feedback is provided individually about weekly tutorial activities, formative assessment tasks and the assignment progress. Detailed guidance as to the assessmentcriteria andthe provision of timely feedback forms an important part of the learning process in this subject.

Content (topics)

  • Industry and strategy analysis: Understanding the strategic decisions businesses make to create/maximize shareholder value, as well as the constraints within which this occurs.
  • Accounting analysis: Understanding the link between strategic considerations and the financial statements, including identification of the quality of accounting numbers.
  • Financial analysis: Assessing the financial performance and position of a business using ratio analysis and cash flow analysis, in light of the strategic direction and accounting quality identified.
  • Prospective analysis: Forecasting financial results.
  • Prospective analysis: Valuation models - Understanding investment returns, and how valuation models are developed to anticipate abnormal returns.
  • Prospective analysis: Valuation models - Implementation
  • Application: Using forecasted financial statements to develop a valuation, and the assessment of that value’s sensitivity to strategic, accounting and financial considerations.

Assessment

Assessment task 1: Assignment (Group)

Objective(s):

This addresses subject learning objective(s):

1 and 2

Weight: 20%
Length:

Maximum 5000 words (exclusive of references and appendices). Appendices are limited to a maximum of 10 pages. Please use a font size of 11, 2.5cm page margins and a line spacing of 1.5.

Assessment task 2: Assignment (Individual)

Objective(s):

This addresses subject learning objective(s):

1, 2, 3 and 4

This addresses program learning objectives(s):

1.1, 1.2, 2.1 and 2.2

Weight: 40%
Length:

Individual Assignment Part A: maximum 2000 words (exclusive of references and appendices). Appendices are limited to a maximum of 5 pages. Please use a font size of 11, 2.5cm page margins and a line spacing of 1.5.

Individual Assignment Part B: maximum 4000 words (exclusive of references and appendices). Appendices are limited to a maximum of 10 pages. Please use a font size of 11, 2.5cm page margins and a line spacing of 1.5.

Assessment task 3: Final Examination (Individual)

Objective(s):

This addresses subject learning objective(s):

1, 2, 3 and 4

Weight: 40%
Length:

2 hour plus 10 minutes reading time.

Criteria:

Students will be assessed based on the following criteria:

  • Understanding content covered
  • Accuracy of response or analysis
  • Identification of relevant issues in the context of subject themes
  • Clarity of communication
  • Demonstration of knowledge of theory

Minimum requirements

Students must achieve at least 50% of the subject’s total marks.

Required texts

Palepu, K, Healy, P and Bernard, V, Business Analysis & Valuation using Financial Statements: Text & Cases, Second Asia-Pacific Edition.

Faculty of Business: Guide to Writing Assignments, Faculty of Business, University of Technology, Sydney (accessed via the link below) Guide to Writing Assignments

Recommended texts

Penman, S (Fifth Edition) Financial Statement Analysis and Security Valuation, McGraw Hill, New York.

References

The following text provides some extension to the main text: Palepu, K, Healy, P and Bernard, V (2008) Business Analysis and Valuation using Financial Statements: Text and Cases, 4th ed, Southwestern, Canada.